institute for regulatory policy studies: the potential for implementing demand response programs in...

Institute for Regulatory Policy Studies: The Potential for Implementing Demand Response Programs in Illinois

May 12, 2006

© 2005 EnerNOC, Inc. All Rights Reserved – Strictly Confidential, Permission Required for Distribution

Contents

EnerNOC Overview

EnerNOC Examples and Experience

DR Policy Objectives

Application to Illinois

Appendix

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The “NOC” in EnerNOC stands for Network Operations Center. EnerNOC enables existing assets with inexpensive, scalable technology to accomplish significant and guaranteed reductions in demand.

EnerNOC Overviewg

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Proven and growing track record - Over 250 MW’s of demand response capacity managed at more than 500 customer sites. Over 500 MW’s of peak demand currently monitored by PowerTrak®

Compelling offering – Total Energy Management Solutions Provider encompassing – Demand Response, Demand Management, Data Management, Research, Education, Permitting, Financing, Metering, Aggregation, Enrollment, Installation, Payment Reconciliation, Maintenance Management, Risk Management

Significant and growing market - Currently serving:– ISO New England (Certified IBCS and Demand Response Provider) – NYISO (Responsible Interface Party)– PJM (Curtailment Services Provider)– California ISO markets (Certified Demand Reserves Partnership Provider)– SCE, National Grid, NStar

Distinguished technology - Provide 24/7, real-time metering and web-based device monitoring and control through open architecture technology that leverages customers’ existing assets

Significant resources– Strong balance sheet and impressive financial track record– Deep management team experience in energy and technology

management – 50 employees with more than 60 engineering and management degrees

EnerNOC is the leading technology-enabled, C&I-focused total energy management solutions provider

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Government

Light Industrial

Education

Food Sales and Storage

Healthcare

Lodging and Resorts

Commercial Office and High Tech

Notable CustomersEnerNOC has secured marquee customers in its Demand Response and Total Energy Management program territories

Large IndustrialAnd Utilities

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EnerNOC Facts

In every Demand Response event that EnerNOC has managed since its inception in 2001, EnerNOC has performed at or above the capacity it has registered in each market.

–EnerNOC has a well-earned reputation for exceeding the expectations it sets for utility and ISO customers and for the markets in which we register and manage our customers’ electrical capacity. When we say we’ll provide 100 MW’s for a demand response event and the event is 2 hours long, we provide 100 MW’s or more for 2 hours . . . period!

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EnerNOC Facts

EnerNOC manages more remote-controlled demand response capacity than any other demand response service provider in the United States

EnerNOC is the only Demand Response Provider who has managed concurrent demand response events in two ISO territories

EnerNOC has more experience performing and supporting customers during demand response events than any other provider in the United States and EnerNOC’s performance during events is unrivaled

EnerNOC manages nearly as much direct load curtailment (lighting, HVAC, other) as backup generation

EnerNOC’s experience with government customers is unrivaled: EnerNOC manages 52,000 kW’s of demand response capacity across 31 government customers

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Demand Response Event Summary – New England, February 27, 2006 Background

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ProgramISO New England Winter Supplemental Program

Event Date 2/27/2006

Event Hours 10:30 AM – 12:30 PM

First ISO Notification 9:45 AM

Capacity Enrolled 103,629 kW

Non-Coincident Peak Performance

133, 584 kW

Number of Assets Enrolled

115


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20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

9:30 10:00 10:30 11:00 11:30 12:00 12:30 13:00

Notification by ISO - 9:45 AM Event Start - 10:30 AM Event End - 12:30 PM

Enrolled Capacity - 103,629 kW

kW

Peak Performance - 133,584 kW @ 10:50 AM

Total Performance - 167,134 kWh

Aggregate Coincident Performance

30-Minute Ramp-Up Window

Total Performance - 300,375 kWh

Demand Response Event Summary – New England, February 27, 2006 EnerNOC Managed Aggregate Coincident Performance – Over 100 MW’s


0

100

200

300

400

500

600

11:00 AM 12:00 PM 1:00 PM 2:00 PM 3:00 PM 4:00 PM 5:00 PM 6:00 PM 7:00 PM 8:00 PM 9:00 PM

Demand Response Event Summary – NY & New England, July 27, 2005CurtailmentUniversity provider curtails more than 400 kW of load at five individual sites.

kW

Notification 1:00 PM

Event Start 1:30 PM Event End 6:00 PM

Baseline

Stacked Meter Demand

Commitment: 370 kW

Performance: 416 kW

-100

0

100

200

300

400

500


Load Curtailment

Provider Summary

• Sites: 5

• Commitment: 370 kW

• Performance:424 kW (non-coincident) 416 kW (coincident)

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200

300

400

500


Voluntary Extension 7:15 PM

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500

1,000

1,500

2,000

2,500

3,000

3,500

4,000


Demand Response Event Summary – NY & New England, July 27, 2005 Generation and CurtailmentUniversity provider combines generation with load curtailment to reduce more than 1.7 MW from the electrical grid.

Provider Summary

• Commitment: 1,450 kW

• Performance: 1,727 kW

kW

Notification 1:00 PM

Event Start 1:30 PM Event End 6:00 PM

Baseline

Meter Demand

Commitment: 1,450 kW

Generator Output

Load Curtailment

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1 13 25 37 49 61 73 85 97 109 121

Performance: 1,727 kW

Voluntary Extension7:15 PM

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Strengthens a PUC’s and a utility’s leadership role in addressing the peak electricity capacity shortfalls and in reducing emissions

Demonstrates the economic and operational viability of demand response as a reliable, verifiable, and economic resource for meeting peak load needs

Compliments existing energy efficiency programs, and serves as a catalyst for further energy management and efficiency measures

Enables effective engagement of C&I customers in real-time market participation and taps into a sizeable capacity resource

Strengthens a PUC’s and a utility’s brand and identity as innovators

DR as a Capacity AlternativeDemand response with EnerNOC delivers numerous benefits.

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Knocking Down Old Barriers to Demand Response

Obstacle: DR is only about system protection

– Realities:

• DR provides a link between wholesale and retail prices, helping to decrease price volatility

• DR provides clean and reliable capacity

• DR provides customers with choices and keeps companies competitive

Obstacle: Metering technology is too expensive

– Reality: Paybacks of less than 1 year

Obstacle: Consumers don’t understand DR

– Realities: C&I consumers jump onboard when given 3 E’s:

• Economics: Have to be compelling

• Execution: Totally automated process – starting with a professional DR audit - allows us to understand customer’s facilities and nominate appropriate load

• Energy Efficiency Enhancements: DR and EE are complementary -- not competitive -- forces


DR as a Capacity Alternative: Capacity on Demand (COD)EnerNOC offers a completely outsourced solution. The complexities of administering and participating in a demand response program are entirely simplified for utilities and end-use customers. Our approach has three key characteristics:

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Load and Technical Analysis

Enable and Enroll Facility

Program Management

Event Management

Conduct facility walk-through– Identify curtailable loads– Identify backup generator

potential– Identify existing metering

systems to integrate and save money

Interview facility engineering and operations staff to identify customer sensitivitiesDevelop technical solution optionsSummarize load analysis, present options for load control and program involvement, and present economic potential

Begin collecting dataResearch, file, and renew all required city and state permits for program participationMaintain all required recordsEnroll load in daily/monthly markets to maximize potential benefit while minimizing riskPresent real-time meter data to system operator for verification and to customer for reportingMonitor loads continuously and adjust enrollments accordinglyReconcile data and collect and disburse program paymentsManage any program disputes and changes for customer

Notify customers in advance of potential eventsNotify customers during day of event of event “window” and requirementsCurtail load/initiate backup generator operation as requiredMonitor, meter, and adjust performance according to enrolled loadNotify customers of event completion and restore normal operationsProvide event and load reports accordinglyContinually ensure operational integrity of technical solution

Design technical solutionProcure required technology (e.g., metering, relays, controls)Install (or integrate with existing) metering, controls, and communicationTest and troubleshoot technical solutionInitiate monitoring and begin metering loadsApply for, administer, and secure eligible cost reimbursementsRegister as customer’s AssetsAggregate customer loads as applicableEnroll assets into each DR program

EnerNOC’s offering is a complete solution.

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DR as a Capacity Alternative: COD Overview

ASPECT VALUE COMMENTS Size 100 MW Large enough to retire a large peaker

Price ~ $100 per kW per year Will enable customer adoption, and provide a guaranteed product at a cost equivalent to or less than a new peaking plant

Term 3 to 5 years Long enough to attract end-user participation

In Service Date

Within 3 months of contract signature Firm ramp-up schedules, with goal of bringing as much capacity online in year one and all capacity online by 18-24 months

End User Assets

EnerNOC directly controls customers’ HVAC systems, lighting systems, process equipment, pumps, other energy consuming devices, and backup generators when permitted and appropriate

EnerNOC’s technology optimizes asset performance and gives customers immediate access to their energy consumption patterns. EnerNOC’s customers typically initiate further energy efficiency initiatives once they recognize the benefits of demand response

Event Window

12:00 pm to 6:00 pm on non-holiday weekdays, to be defined by utility, system operator, and EnerNOC

Window parallels system peak

Event Trigger

Reliability events and/or peak demand hours, TBD by the utility, system operator, and EnerNOC

DR resources will provide capacity during reliability events and allow retirement of dirty, out of favor peak plants or obviate need for new peak plant build outs

The following table summarizes key aspects of a program concept

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Demand Response Public Policy Objectives

Capacity valued on par with new peakers – particularly new capacity; locationally-specific pricing

Three- to five-year capacity contracts (e.g. SWCT Gap RFP) or market pricing within predictable bands (e.g. NY ISO Zone J and K)

Appropriate baseline methodology – not last year’s load; with appropriate weather and recent experience adjustment (e.g. declining weighted average of previous days load adjusted with weather adjustment)

Direct real-time performance monitoring (e.g. ISO-NE’s ICBS-type system) enabling system operators to see performance during events

Environmental regulations that recognize impact of BUG DR as better than running baseload/intermediate plants on Eco-min

Reasonable and clear event trigger mechanisms – not a random process

Response opportunities differentiated on basis of real system needs

– capacity during peaks vs. reliability contingency response

– Time of response; Time of Day; Days per year


Strengthens a PUC’s and a utility’s leadership role in addressing the peak electricity capacity shortfalls and in reducing emissions

Demonstrates the economic and operational viability of demand response as a reliable, verifiable, and economic resource for meeting peak load needs

Complements existing energy efficiency programs, and serves as a catalyst for further energy management and efficiency measures

Enables effective engagement of C&I customers in real-time market participation and taps into a sizeable capacity resource

Strengthens a PUC’s and a utility’s brand and identity as innovators

DR as a Capacity AlternativeDemand response with EnerNOC delivers numerous benefits.

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Total Energy ManagementEnerNOC’s strategy is to serve customers with a technology-enabled, total energy management solution that optimizes energy usage and minimizes energy costs.

Total Energy Management with EnerNOC

Asset Management

Energy Analytics

Time

$ V

alu

e Advanced Control

EnergyProcurement

Advanced Metering

Demand Response 2% to 5% Bill Savings

5% to 10% Bill Savings



20%+ Bill Savings

You Can’t Manage What You Don’t Measure


Total Energy ManagementEnerNOC’s PowerTrak platform allows for real-time monitoring of electric, gas, and water consumption

Users are able to see each of their metered assets, in aggregate, in user-defined groups, or individually.


Appendix g

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Site Survey

Technical and Financial Analysis

Report and Presentation

Interview

EnerNOC Examples and Experience: Demand Response AuditEnerNOC’s four-part evaluation of a facility’s energy use and operating flexibility identifies opportunities for how demand response can be implemented, energy usage can be reduced or rescheduled, and peak demand limited.

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50

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250

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400

12:00 am 2:00 am 4:00 am 6:00 am 8:00 am 10:00 am 12:00 pm 2:00 pm 4:00 pm 6:00 pm 8:00 pm 10:00 pm 12:00 am

Time of Day

kW

ISO Calls 7 Hour “Event” Starting at 11:00 a.m.

EnerNOC Automatically

Communicates to All Stores

EnerNOC Restores

Automatically

30 kW from 1/3 Lights

20 kW from Store AC or Air Handler

20 kW from Backup

Generator

EnerNOC Remotely Curtails/

Generates

EnerNOC Examples and ExperienceEnerNOC’s deploys industry-specific solutions that maximize the customer’s contribution and return without risk to business continuity.

Supermarket 24 Hour Load Profile and EnerNOC Demand Response Application

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Demand Response provides a better solution to meeting peak demand than the traditional solution of over-building generation.

Demand Response Impact Potential

500

1,000

0

US Summer Peak Demand: 697 GW

Hydro

Nuclear

Coal

Renewables

Combined Cycle

Gas/Oil Steam

Pumped Storage

Peaking CT/IC

US Generating Capacity: 948 GW

Source: EIA Electric Power Annual 2003

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800

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1,000

5 500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

8,000

8,500

8,760

Illustrative Load Duration Curve for 1,000 MW’s of Electricity in the US

Annual Hours

MW

’s

Peak with DR

Demand Response Impact PotentialEnerNOC reduces peak demand associated with ~1% of annual electricity consumption. Nationwide, DR could provide 95 GW with a replacement value of ~$28 billion.

Peak without DR

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Peak Load Drop Potential

0%

2%

4%

6%

8%

10%

12%

14%

0255075100

Peak Hours

% M

W R

educ

tion

Based on CT 2004 load duration curve

Demand Response Impact PotentialA few hours of demand response provide substantial peak load reduction.

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Demand response is slow and insignificant – it will never provide enough capacity to address grid issues

Demand response is not reliable

Demand response is not functionally equivalent to generation

Demand response payments have to be uniform within ISO territories

Demand response will fully mitigate energy market price spikes

Demand response is not an environmentally friendly solution

Demand Response Mythsg

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Fast and significant – EnerNOC enabled 40 sites and 100 MW in less than six weeks; these sites can be dispatched within minutes

Precise – Demand response capacity can be brought online exactly where it is needed when it is needed

Verifiable and accountable – EnerNOC captures 5-minute interval data, providing direct visibility into asset performance; EnerNOC accepts penalties for non-performance; utilities and system operators can rely on us

Economical – Demand response capacity is very cost effective compared to alternatives, and customers commit when the price is right, but Demand Response is not a panacea for all market challenges.

Environmentally friendly – Many customers curtail electricity usage during events; others use backup generators (BUGs), and U.S. EPA studies show that demand response can reduce air emissions, even when diesel-fueled BUGs are used

Demand response is ready for primetime because it is:

Demand Response Market Realitiesg

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$30

$40

$50

$60

$70

$80

$90

$100

$110

$120

9:00 10:00 11:00 12:00 1:00 2:00 3:00 4:00 5:00

Real-Time Locational Marginal Prices (CT), 8-20-04

($/MWh)

EnerNOC Examples and ExperienceDemand Response Can Make a Difference

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EnerNOC, Inc.28 West 44th St. Suite 1200

New York, NY 10036212-523-0519 – Phone

212-523-0332 – Fax

EnerNOC, Inc.45 Fremont St. Suite 1400San Francisco, CA 94105

415-278-8413 – Phone415-278-8444 – Fax

EnerNOC, Inc.75 Federal Street, Suite 300

Boston, MA 02110617-224-9900 – Phone

617-224-9910 – Fax

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institute for regulatory policy studies: the potential for implementing demand response programs in...

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demand management

demand response programs

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